Reliance has filed offer documents with SEBI for launching three ETFs
More
competition is in store in passive funds market as India’s second largest mutual fund,
Reliance plans to add three more ETFs in its product basket. The fund house has
branded its ETFs as R*shares and will be joining the race with players like
Goldman Sachs and Motilal Oswal who predominantly offer ETFs.
Reliance has filed offer document for R*Shares CNX 100 Fund, R*Shares Dividend Opportunities Fund and R*Shares Consumption Fund with SEBI. R*Shares Consumption Fund will be benchmarked against CNX Consumption Index while R*Shares Dividend Opportunities Fund will track CNX Dividend Opportunities Index. IIFL also has an ETF tracking CNX Dividend Opportunities Index.
Reliance
has two ETFs - R*shares Gold ETF and R*shares banking ETF. R*shares Gold ETF
manages Rs 2899 crore while R*shares Banking ETF manages Rs 12 crore.
Passive
funds - both index funds and ETFs are
yet to catch investors fancy. Lack of distribution support and the requirement
of having demat accounts to buy ETFs are said to be the major stumbling blocks
for the slow pick up of ETFs among retail investors. “Mutual Funds and ETFs are
long-term products and thus brokers are not inclined to recommend ETFs to their
clients. Outperformance of active funds vis-à-vis passive funds results in
investors rushing towards active funds. ETFs are mainly popular among HNIs and
FIIs. Investors having a demat account tend to redeem once they make some
money,” says Gajendra Kothari of Etica Wealth Management.
There are 32 ETFs (including 14 Gold ETFs) in the industry. The industry currently manages Rs 13192 crore in ETFs, representing a mere 2% of industry’s overall assets. A large chunk of this pie (Rs 11477 crore) is held in Gold ETFs.
